I have a house that I have through a property manager in Michigan. My tenant moved out sometime in September and the property managers didn’t even know. It wasn’t until someone went to work on the property and they told the property managers. They have charged me $300 for evection fees. Can they do that? Are they then allowed to take the 10% management fee out of the security deposit?
First, is the eviction fee a reasonable and legitimate expense when it appears that a tenant has abandoned the property? The second: are they are entitled to a 10 percent management fee for collecting the security deposit?
The second question is pretty straightforward: Check your contract language. Your contract should state explicitly what kinds of collections your management company is entitled to take their fee out of. I suspect the $30 charge they took out of the management fee is legitimate.
Personally, I wouldn’t end a business relationship over a $30 issue unless there was some issue of integrity and trust involved.
It will take way more than $30 worth of hassle to replace the management company, and it’s probably easier to say, “Meh! Find me another tenant and let’s make some money for both of us!” Maybe it’s something you’ll want to clarify in the language of your contract, and if they’re clearly in breach, point it out. But I’m much more interested in getting another tenant than in replacing a management company you probably picked for a reason!
There is the other issue of how much time went by before the property management company realized that your tenants moved out. But you’ll have to assess that issue yourself.
Now, on to the eviction issue. Have you made contact with the tenant? Do you know his or her whereabouts? The last thing you want is to rent the place out again, have the new tenants move in, and turn around to find the old tenants pulling into the driveway in their station wagon loaded with all their worldly belongings they just decided to drive down to Florida where it’s warm, fully expecting to walk right back into the property they think they’re still renting!
There is, therefore, a legal process to go through if a tenant abandons a property and you can’t find where they are to have them formally declare they are breaking the lease and don’t plan to come back.
In Michigan, the applicable law governing what landlords and their representatives can do in the event they have a good-faith belief that the tenants have abandoned the property is Section 600.2918 of the Revised Judicature Act of 1961. If the rent has been paid, the tenant is considered to have the right to the use of the property.
Otherwise, the owner or his or her manager or agent can only enter the property if The owner believes in good faith that the tenant has abandoned the premises, and after diligent inquiry has reason to believe the tenant does not intend to return, and current rent is not paid. (Paragraph 3(c)).
If the rent has not been paid, then your manager has to go through the eviction process, including a series of notifications, filings and court proceedings and get a court order. That’s a legal process you don’t want to short-circuit – and that costs time and money.
Of course, the best course of action is to call the tenant and say, “Are you coming back?” If they say “no,” then you can say “do me a favor and send me a letter so I can re-rent the place!”
That should cover your tracks. Otherwise, you probably want to go through the eviction process and ensure the tenant’s rights to the property are formally terminated before you can rent the property again.
Perhaps the property manager should have been in closer contact with you about the process so you don’t get surprised by a $300 bill. But the eviction fee does not strike me as necessarily illegitimate. Again, it goes back to your contract and the scope of your agreement, and your definition of what acts and decisions you reserve for yourself, and what acts and decisions were delegated to the manager.
Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.